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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
(Amendment No. ______)*
CARDIOTHORACIC SYSTEMS, INC.
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(Name of Issuer)
Common Stock, par value $0.001
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(Title of Class of Securities)
14190710
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(CUSIP Number)
John E. Runnells
The Vertical Group, L.P.
18 Bank Street
Summit, N.J. 07901
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(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
June 4, 1998
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(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box |_|.
Note: Schedules filed in paper format, shall include a signed original and five
copies of the schedule, including all exhibits. See ss. 240.13d-7(b) for other
parties to whom copies are to be sent.
* The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities, and
for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be deemed
to be "filed" for the purpose of Section 18 of the Securities Exchange Act of
1934 ("Act") or otherwise subject to the liabilities of that section of the Act
but shall be subject to all other provisions of the act (however, see the
Notes).
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<TABLE>
<CAPTION>
SCHEDULE 13D
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<S> <C>
CUSIP NO. 14190710 Page 2 of 10 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Vertical Fund Associates, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS |_|
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF | 7 SOLE VOTING POWER
|
SHARES | 577,000
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BENEFICIALLY | 8 SHARED VOTING POWER
| --------------------------------------------------------------------------------------------------------------------
OWNED BY |
| 9 SOLE DISPOSITIVE POWER
EACH |
| 577,000
REPORTING | --------------------------------------------------------------------------------------------------------------------
|
PERSON WITH | 10 SHARED DISPOSITIVE POWER
| --------------------------------------------------------------------------------------------------------------------
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
577,000
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 4.2%
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14 TYPE OF REPORTING PERSON*
PN
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
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<TABLE>
<CAPTION>
SCHEDULE 13D
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<S> <C>
CUSIP NO. 14190710 Page 3 of 10 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
The Vertical Life Sciences, L.P.
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
WC
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS |_|
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
Delaware
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NUMBER OF | 7 SOLE VOTING POWER
|
SHARES | 105,500
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BENEFICIALLY | 8 SHARED VOTING POWER
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OWNED BY |
| 9 SOLE DISPOSITIVE POWER
EACH |
| 105,500
REPORTING | --------------------------------------------------------------------------------------------------------------------
|
PERSON WITH | 10 SHARED DISPOSITIVE POWER
| --------------------------------------------------------------------------------------------------------------------
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
105,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 0.8%
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14 TYPE OF REPORTING PERSON*
PN
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
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<TABLE>
<CAPTION>
SCHEDULE 13D
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<S> <C>
CUSIP NO. Page 4 of 10 Pages
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1 NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Stephen D. Baksa
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2 CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP* (a) |_|
(b) |_|
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3 SEC USE ONLY
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4 SOURCE OF FUNDS*
PF
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5 CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS |_|
IS REQUIRED PURSUANT TO ITEMS 2(d) or 2(e)
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6 CITIZENSHIP OR PLACE OF ORGANIZATION
U.S.A.
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NUMBER OF | 7 SOLE VOTING POWER
|
SHARES | 20,000
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BENEFICIALLY | 8 SHARED VOTING POWER
|
OWNED BY | 682,500
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EACH |
| 9 SOLE DISPOSITIVE POWER
REPORTING |
| 20,000
PERSON WITH | --------------------------------------------------------------------------------------------------------------------
|
| 10 SHARED DISPOSITIVE POWER
|
| 682,500
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11 AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
702,500
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12 CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11)
EXCLUDES CERTAIN SHARES |_|
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13 PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11) 5.1%
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14 TYPE OF REPORTING PERSON*
IN
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</TABLE>
*SEE INSTRUCTIONS BEFORE FILLING OUT!
INCLUDE BOTH SIDES OF THE COVER PAGE, RESPONSES TO ITEMS 1-7
(INCLUDING EXHIBITS) OF THE SCHEDULE, AND THE SIGNATURE ATTESTATION
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Item 1. Security and Issuer.
This Statement on Schedule 13-D ("Statement") is filed with respect to
the Common Stock, par value $0.001 per share, of Cardiothoracic Systems, Inc.
(the "Issuer"), whose principal executive offices are located at 3280 Alpine
Road, Portola Valley, California 94028. Such class of securities is hereinafter
referred to as "CTSI Common Stock."
Item 2. Identity and Background.
This Statement is filed jointly by The Vertical Fund Associates, L.P.
("Associates") and Vertical Life Sciences, L.P. ("Life Sciences") (collectively,
the "Partnerships") and Stephen D. Baksa ("Baksa"). Each of the Partnerships is
a Delaware limited partnership whose business address is 18 Bank Street, Summit,
New Jersey 07901. The sole general partner of each of the Partnerships is The
Vertical Group, L.P. ("Group"), a Delaware limited partnership whose business
address is 18 Bank Street, Summit, New Jersey 07901. The general partners of
Group are Baksa, Richard B. Emmitt, Jack W. Lasersohn and John E. Runnells
(collectively, the "Individuals"), each of whom is a United States citizen and
has a business address of 18 Bank Street, Summit, New Jersey 07901. Each of the
Partnerships, Group and the Individuals is engaged principally in the business
of securities investment. During the past five years, neither of the
Partnerships nor Group nor any of the Individuals has been (i) convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors) or
(ii) a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction as a result of which such person was or is subject to a
judgment, decree or final order enjoining future violations of, or prohibiting
or mandating activities subject to, federal or state securities laws or finding
any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
As of June 4, 1998, Associates owned 577,000 shares of CTSI Common
Stock, which it acquired at an aggregate cost of $1,058,872, Life Sciences owned
105,500 shares of CTSI Common Stock, which it acquired at an aggregate cost of
$695,377, and Baksa owned 20,000 shares of CTSI Common Stock, which he acquired
at an aggregate cost of $210,000. All of the 702,500 shares of CTSI Common Stock
collectively owned by the Partnerships and Baksa are hereinafter referred to as
the "Shares". The source of funds used by each Partnership to acquire the Shares
owned by it was such Partnership's internal cash funds and by Baksa was his
personal funds.
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Item 4. Purpose of Transaction.
The Partnerships and Baksa have acquired the Shares for investment and,
depending on prevailing market prices and other factors, may purchase additional
shares of CTSI Common Stock or sell some or all of the Shares from time to time.
Except as set forth above, the Partnerships and Baksa have no current plans or
proposals that relate to or would result in:
(a) the acquisition by any person of additional securities of the
Issuer, or the disposition of securities of the Issuer;
(b) an extraordinary corporate transaction, such as a merger,
reorganization or liquidation, involving the Issuer of any of its subsidiaries;
(c) a sale or transfer of a material amount of assets of the Issuer or
any of its subsidiaries;
(d) any change in the present board of directors or management of the
Issuer, including any plans or proposals to change the number or term of
directors or to fill any existing vacancies on the board;
(e) any material change in the present capitalization or dividend
policy of the Issuer;
(f) any other material change in the Issuer's business or corporate
structure;
(g) changes in the Issuer's charter, bylaws or instruments
corresponding thereto or other actions which may impede the acquisition of
control of the issuer by any person;
(h) causing a class of securities of the Issuer to be delisted from a
national securities exchange or to cease to be authorized to be quoted in an
inter-dealer quotation system of a registered national securities association;
(i) a class of equity securities of the Issuer becoming eligible for
termination of registration pursuant to Section 12(g)(4) of the Act; or
(j) any action similar to any of those enumerated above.
Item 5. Interest in Securities of the Issuer.
(a) and (b) Of the total Shares beneficially owned by the Partnerships
and Baksa, 577,000 shares (approximately 4.2% of
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the total outstanding) are directly and beneficially owned by Associates,
105,500 shares (approximately 0.8% of the total outstanding) are directly and
beneficially owned by Life Sciences, and 20,000 shares (approximately 0.1% of
the total outstanding) are directly and beneficially owned by Baksa. Subject to
the next succeeding paragraph, each of the Partnerships and Baksa has the sole
power to vote or direct the vote and to dispose or direct the disposition of the
Shares directly and beneficially owned by such person.
In addition, Group may be deemed to be the beneficial owner of all
682,500 Shares (approximately 4.9% of the total outstanding) collectively owned
by the two Partnerships because, as the sole general partner of both
Partnerships, Group has the sole power to vote or direct the vote and to dispose
or direct the disposition of such Shares, and each of the Individuals (including
Baksa) may be deemed to be the beneficial owner of all 682,500 Shares
(approximately 4.9% of the total outstanding) collectively owned by the two
Partnerships because as a general partner of Group (which is the sole general
partner of both Partnerships), each such Individual shares the power (which may
be exercised by any one of such Individuals acting alone) to vote or direct the
vote and to dispose or direct the disposition of such Shares.
(c) The chart below lists all transactions in CTSI Common Stock during
to past 60 days by any of the persons identified in response to paragraph (a) of
this Item 5, all of which transactions were purchases of CTSI Common Stock
effected in the open market:
<TABLE>
<CAPTION>
Person
Effecting Date of Number of Price per
Transaction Transaction Shares Share
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<S> <C> <C> <C>
Associates April 23, 1998 10,000 $ 5.50
Associates April 24, 1998 20,000 $ 5.96
Associates April 28, 1998 14,000 $ 5.87
Associates April 29, 1998 6,500 $ 6.00
Associates May 1, 1998 17,500 $ 5.94
Associates May 6, 1998 4,000 $ 5.81
Associates May 8, 1998 12,500 $ 6.00
Associates May 28, 1998 10,000 $ 5.00
Associates June 4, 1998 7,500 $ 4.81
Life Sciences April 23, 1998 5,000 $ 5.50
Life Sciences April 24, 1998 9,500 $ 5.96
Life Sciences April 28, 1998 14,000 $ 5.87
Life Sciences April 29, 1998 6,000 $ 6.00
Life Sciences May 1, 1998 17,500 $ 5.94
Life Sciences May 6, 1998 3,500 $ 5.81
Life Sciences May 8, 1998 12,500 $ 6.00
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Life Sciences May 28, 1998 10,000 $ 5.00
Life Sciences June 4, 1998 7,500 $ 4.81
</TABLE>
(d) and (e) Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships With
Respect to Securities of the Issuer.
Except as described in the second paragraph of Item 5 (a) and (b) of
this Statement and in this Item 6, there are no contracts, arrangements,
understandings or relationships (legal or otherwise) between or among any of the
persons named in Item 2 of this Statement, or between or among any of such
persons and any other person with respect to any securities of the Issuer,
including but not limited to transfer or voting of any securities, finder's
fees, joint ventures, loan or option arrangements, puts or calls, guarantees of
profits, division of profits or loss, or the giving or withholding of proxies.
Since Group is the sole general partner of each Partnership and Baksa
is a general partner of the Group, it is likely that the Partnerships and Baksa,
although not obligated to do so, will in general adopt similar strategies with
respect to their investments in the Issuer (including with respect to the
acquisition, disposition and voting of CTSI Common Stock). In addition, Group,
as general partner of each of the Partnerships, may from time to time combine
orders to purchase or sell CTSI Common Stock on behalf of the Partnerships into
a single purchase or sale order and thereafter allocate such purchase or sale
between the Partnerships on an average price basis.
Item 7. Material to be Filed as Exhibits.
Exhibit 1 -- Joint Filing Agreement dated June 11, 1998.
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Signature.
After reasonable inquiry and to the best of their knowledge and belief,
the undersigned certify that the information set forth in this Statement is
true, complete and correct.
June 11, 1998 VERTICAL FUND ASSOCIATES, L.P.
BY: THE VERTICAL GROUP, L.P.
General Partner
By: /s/ John E. Runnells
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John E. Runnells
General Partner
VERTICAL LIFE SCIENCES, L.P.
BY: THE VERTICAL GROUP, L.P.
General Partner
By: /s/ John E. Runnells
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John E. Runnells
General Partner
/s/ Stephen D. Baksa
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Stephen D. Baksa
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Exhibit 1
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JOINT FILING AGREEMENT
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Pursuant to Rule 13d-1(f)(1) under the Securities Exchange Act of 1934,
the undersigned hereby agree that only one statement containing the information
required by Schedule 13D (or any amendment thereof) need be filed on their
behalf with respect to the beneficial ownership of any equity securities of
Cardiothoracic Systems, Inc. or any subsequent acquisitions or dispositions of
equity securities of Cardiothoracic Systems, Inc. by any of the undersigned.
Date: June 11, 1998
VERTICAL FUND ASSOCIATES, L.P.
BY: THE VERTICAL GROUP, L.P.
General Partner
By: /s/ John E. Runnells
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John E. Runnells
General Partner
VERTICAL LIFE SCIENCES, L.P.
BY: THE VERTICAL GROUP, L.P.
General Partner
By: /s/ John E. Runnells
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John E. Runnells
General Partner
/s/ Stephen D. Baksa
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Stephen D. Baksa
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